Publicis Groupe CEO Maurice Levy told his company’s AGM that he was confident that Publicis Groupe would continue to outperform the market in the second half of 2012 despite the financial carnage in the Eurozone (with Spain now heading for the knacker’s yard) and clients trimming budgets accordingly.
He also produced this interesting take on the fortunes of the company in the Levy era which followed the death of Publicis founder Marcel Bleustein-Blanchet in 1996.
“Three key steps transformed Publicis into a global, multi-network communication group, at the forefront of cutting-edge market segments, backed by a rock-solid balance sheet (OK Maurice, that’s enough of that).
“The first step was to take an excellent French agency known for its highly popular ads and make it a global network with the credibility to win over leading global advertisers, within an incredibly short space of time.
“Second came a series of high risk but carefully calculated gambles, when we acquired Saatchi & Saatchi and Bcom3 (Leo Burnett, Starcom MediaVest Group etc).
“The final step has been a bold strategy of all-out pursuit of leadership in the digital sector that has made us the world number one.
“The figures speak for themselves. Between 1996 and 2011, Publicis Groupe revenue increased tenfold (from 560 M€ to 5 816 M€), net income multiplied by 26 (from 23 M€ to 600 M€) and market capitalization increased by a factor of 20.
“According to Bloomberg, someone who invested 100 euros on February 1, 1996 would, by December 31, 2011, have lost 12 euros if they had invested in Interpublic, gained 117 euros on an investment in Havas, 167 euros if they had chosen the CAC 40 index (the French stock market), 390 euros on WPP, 461 euros on Omnicom and 837 euros if they had invested in Publicis.
“Our task now is to continue this great adventure by investing further in the Groupe’s two growth pillars, the digital sector and high-growth markets, and by preserving and adhering to those values that make Publicis such a special company.”
So, pretty good then (if his, or Bloomberg’s, figures are correct). Has PG really out-performed the market? Yes and chiefly because Levy’s big bets have paid off.
Bcom3, if I remember rightly, was a combo of Burnett, MacManus (which once traded as Masius in the UK) and NW Ayer which got the French agency group into the US and also brought an alliance with Dentsu, which was terminated last year. MacManus and Ayer (once a huge American agency) have gone but Burnett remains one of the strongest agency brands worldwide. Starcom is now the biggest global media agency.
Saatchi & Saatchi was an even bolder deal, the network founded by the Saatchi brothers was in danger of imploding when rebel shareholders forced them out, to be followed by Maurice and Charles setting up M&C Saatchi in the UK after a spat with PG over the name.
Saatchi has never quite recovered momentum in the UK (although M&C has prospered mightily) but the Saatchi network worldwide has, particularly in high growth areas like Latin America.
And Levy’s big bets on digital have also worked, he spent around $2bn on Digitas and then Razorfish (the latter from Microsoft), a huge amount for PG at the time. He has since added Rosetta Marketing Group and Big Fuel to his digital collection but Digitas and Razorfish remain the biggies in PG’s digital media group, now called VivaKi.
Levy’s only problem now is to find someone to take over from him as CEO when he steps down (he’s postponed his retirement at least once). But he’s not alone with that dilemma at adland’s top table.